AOL buddies with mobile phone users via SMS

America Online Inc. (AOL) is buddying with mobile phone operators to take its AOL Instant Messenger (AIM) and ICQ messaging services from the desktop to users' pockets, and Thursday announced a system integration deal with Sema PLC that will make it easier for them to offer its services.

AOL, now part of AOL Time Warner Inc., made the announcements here at the 3GSM World Congress, a meeting of operators, suppliers and users of GSM (Global System for Mobile Communications) networks.

Instant messaging was originally developed as a way for individuals to chat over the Internet with others sharing similar interests (their "buddies", in AOL jargon). Since then, it has been adopted by many businesses as a cost-effective way of maintaining near real-time communications between distant offices, faster than e-mail yet less intrusive than a telephone call. AOL's latest plans for the service could help employees keep in touch even when on the road.

The new services could potentially allow almost any of the world's 457 million GSM mobile phone users to log on to AIM or ICQ by SMS (short message service), a basic facility of the vast majority of GSM phones in use. The company introduced WAP (Wireless Applications Protocol) versions of its messaging services last October, but these can only be accessed by users with the latest phone models.

Standing between AOL and these millions of mobile phone users are the GSM network operators. To reach a network operator's subscribers, AOL needs to build a bridge between its servers and the operator's SMSC (Short Message Service Center), a kind of clearing house for text messages.

IT services company Sema announced Thursday that it will work with AOL to integrate instant messaging with the SMSCs it builds for mobile operators. This "will enable operators worldwide to increase customer loyalty and grow network usage through SMS traffic," said David Lloyd, director of Sema Telecoms Messaging, according to a company statement.

So far, AOL has struck deals to deliver instant messaging via SMS with two network operators, VoiceStream Wireless Corp. in the US and Hutchison Telecommunications (Hong Kong) Ltd., according to Jon Eric Bylin, senior product manager at America Online Inc.'s AOL Mobile division. VoiceStream will offer messaging services under the AIM brand, while in Hong Kong it is ICQ which will be to the fore.

The services will allow users to perform basic messaging functions such as signing into and out of the system, sending and receiving messages from buddies, adding new buddies to their list and finding out who is available online.

There's nothing new about mobile phone users chatting with one another via SMS: indeed, this is one of the applications which leads the GSM Association to predict that 20 billion such text messages will be exchanged by GSM subscribers this year. What AOL's offering adds, according to Bylin, is functionality such as presence notification, filtering of messages and the ability to interact with PC users.

The interest of all this for network operators is that they levy a charge for each text message sent and, in markets such as North America, for each message received too. With just 160 characters allowed per message and pricing in Europe around 0.15 euros per message sent, such talk isn't cheap.

Existing WAP services use a different pricing model: users dial in to a server (the WAP gateway) and pay per minute while they chat. Messaging has already generated "millions of extra minutes" for Sprint Corp., which has partnered with AOL in the US, but the downside for users is that they must pay for as long as they are logged on to the AIM service.

On the horizon, new data services such as GPRS (General Packet Radio Service) may make it cheaper for users to stay logged on to AIM all day. GPRS is already commercially available in Hong Kong, and numerous operators in Europe have announced their intention to go live with GPRS within the next few months. It is a packet-switched technology, and only consumes network resources when data is being transmitted, so it is widely expected that customers will be charged for the amount of data they exchange, rather than the time they spend logged on to the network.

"GPRS is going to make this kind of thing more attractive to consumers," AOL's Bylin said.

While AOL is prepared to open up its Instant Messenger servers to GSM network operators, it remains steadfastly opposed to the idea of doing so for users of other instant messaging services -- although these services are not taking AOL's resistance lying down. "The best way for us to protect Instant Messenger integrity is for us to control the messaging all the way across the network, and the appropriate way to do this is at a network peering level. This is particularly important for mobile messaging," Bylin said.

One company shut out of the AIM party is MessageVine, also exhibiting at the 3GSM World Congress. MessageVine develops own-brand instant messaging services for mobile phone operators which enable them to build a community of desktop and mobile messaging users, according to the company's Vice President of International Operations, Amit Rahav. MessageVine's server supports interaction via its own PC client or those of AOL's ICQ or Microsoft Corp.'s MSN Messenger, and also from mobile phones using WAP, SMS or Japanese operator NTT DoCoMo Inc.'s I-mode system.

From a technical point of view, there's no reason why subscribers of different mobile networks shouldn't communicate with one another through the service, Rahav said. It would make sound business sense for operators to interlink their systems too: "The big boom in SMS usage was when the operators opened up the gateways to other carriers," he said.

The 3GSM World Congress runs through Friday at the Palais des Festivals, Cannes. Further information can be found at http://www.gsmworldcongress.com/.

AOL Time Warner, in New York, can be contacted at +1-212-484-8000 or found online at http://www.aoltimewarner.com/. MessageVine, in Ramat Hasharon, Israel, can be reached at +972-3-5479996 or at http://www.messagevine.com/. Sema, with dual headquarters in Montrouge, France and London, can be contacted at +33-1-40-92-4092 and +44-20-7830-4444, or at http://www.sema.com/.

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